Prabhu's ministry intends to invest Rs 856,020 crore ($137 billion) over the next five years to revamp the world's most travelled railway network

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Railway Minister Suresh Prabhu with MoS for Railways Manoj Sinha and Railway Board members giving finishing touches to the Railway Budget 2015-16 in New Delhi on Wednesday February 25, 2015 Picture by Dalip Kumar

Prabhu’s ministry intends to invest Rs 856,020 crore ($137 billion) over the next five years to revamp the world’s most travelled railway network–and he intends to do this without any passenger-fare hikes.

For 2015-16, Prabhu intends to spend Rs 100,011 crore, an increase of 52% over the previous year.

Part of the money over this year and the next four, will come from the central government, which, on Thursday, announced Rs 40,000 crore annually as additional finance. The ministry also plans to borrow Rs 17,655 crore from the market, use Rs 17,793 crore from internal resources and get Rs 5,781 crore through private-public partnerships.

This leaves Prabhu with a Rs 18,782-crore hole for this year alone and a task on his hands : to cut costs, raise money and generate profits.

As a first measure to cut costs, Prabhu announced no new trains–the first for a railway minister after many years.

The minister informed Parliament that the operating ratio (how much money is spent on day-to-day operations to earn revenues, giving an indication of the funds left for safety and expansion) of Indian Railways would improve from 91.8% in 2014-15 to to 88.5% this year, the best in the last nine years.

The operating ratio of a company is said to be good if it is below 80%. The last time it was below 80% for the Indian Railways was 74.7% in 1963-64.

Passenger receipts are expected to increase 16.7% to Rs 50,175 crore in 2015-16. In 2014-15, passenger receipts declined from the budget estimates. Goods earnings increased 1%, and are estimated to increase 13% in 2015-16.